Course overview
This course provides an introduction to financial analysis and capital budgeting with an emphasis on the valuation of real investment projects. Topics discussed include: analysis of the firm’s choice among alternative investment projects, the term structure of interest rates, modern portfolio theory and the valuation of risky assets, the estimation of free cash flows, capital structure choices, and the cost of capital.
Key takeaways
The objective of this course is to provide a rigorous introduction to the fundamental principles of asset valuation and financing in competitive financial markets. The course is designed to provide an outline of modern finance for those who wish to specialize in finance as well as those who intend to pursue other disciplines.
The course is organized around the three main ideas in finance:
- The time value of money: Here you will learn to value financial assets such as bonds, stocks, and futures, and to appraise investment projects and corporate strategies using a rigorous framework.
- Diversification and risk: These classes provide a thorough grounding in the trade-off between risk and return given by modern portfolio theory. The tools enable you to assess financial risks as well as business risks.
- Arbitrage and hedging: We will learn how to price assets using no-arbitrage replication arguments. The tools will help you understand how to hedge different types of financial risks.
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